What's in store for real estate in the Bay Area for the coming year? Most in the real estate industry agree that it will get worse before it gets better. However, predictions vary among our "experts." What are we in store for in 2008? When will prices begin to recover? Hear what some of them are saying.

"Don't count on market rebounding in '08, experts say." - Marni Leff Kottle of the San Francisco Chronicle.

"A real recovery in the housing market is probably at least a year off," said Robert Kleinhenz, deputy chief economist for the California Association of Realtors.

California Association of Realtors's forecast for 2008; sales volume will continue to fall, 9% in 2008, as will the median price of a home, at 4%. Take a look at the 2008 California Housing Market Forecast presentation by Leslie Appleton-Young, Vice President and Chief Economist for the California Association of REALTORS® (C.A.R.).

"The best guesstimate most can come up with these days on a residential housing recovery is that 2008 will be more than half over before housing prices even stabilize. Right now, it's anybody's guess as to when they will start to grow positively." - Ryan Fuhrmann, an article printed in The Motley Fool.


It may take until the end of 2008 or beginning of 2009 for the market to hit bottom, said Mark Zandi, chief economist at Moody's Economy.com.

"But the one thing that economists and real estate agents seem to agree on is this: As bad as it may get in the Bay Area, the region is weathering the downturn in the real estate market much better than most other places."

"The housing market is fairly strong in the vast majority of the Bay Area," said Ken Rosen, chairman of the Fisher Center for Real Estate at UC Berkeley. "It's slipping a little, but it's not the free fall you have in some parts of the country."

"When you look at the rest of the state and even the rest of the country, the Bay Area has held up quite well," said Larry Klapow, president of Coldwell Banker's San Francisco Bay Area region. "The market has shown incredible resiliency." - "So Long, '07"

"Builder's expect recovery in second half" - Jessica Saunders, East Bay Business Times.

"At least two builders expect to see some recovery in the East Bay housing market in the second half of 2008, but another expert thinks it will be 2009 before demand and supply balance out."

"Once we get through the credit crunch, and buyers realize the world didn't end, they will come back," said Scott Menard, SummerHill Homes' chief operating officer, who predicts the market will continue down through at least the first quarter. "Next year will probably be a bit of an adjustment year."

Which brings us to the question; Will 2008 be a good time to invest in real estate? See what a recent survey showed taken by the East Bay Business Times. 60% say that now is a good time to buy! Read their comments as to why.

Labels: Bay Area Real Estate, CAR, East Bay Business Times, Fisher Center for Real Estate, Ken Rosen, Moody's Economy, Real Estate Cycles, San Francisco Chronicle, The Motley Fool

"The housing market is soft. Hard times for some can mean opportunity time for others. Could now be a good time to step into the housing marker and pick up a bargain?" Dian Hymer of Inman News asks.

Her conclusion; "There are good buying opportunities in the current market for well-qualified buyers. Just make sure that you pick your bargains carefully." Read her entire article HERE.

Lew Sichelman, United Media Feature, speaks about how most would-be buyers have taken themselves out of the market until prices "hit bottom."

That could be a mistake for those who plan to stay in their new home for quite awhile. "The common wisdom is that if the house of your dreams comes along, go for it. After all, it may not be available six months from now. As long as you remain in the house, any further drop in prices will be offset by rising prices down the road."

If you look at home prices over the past 40 years, there is a very predictable cycle: Home prices increase for several years, are followed by a slight price drop and then stay flat for the next few years. You can see this pattern on a graph. Although they vary somewhat by location, they usually follow the same pattern.

Lew Sichelman states; It's tough to know the precise moment when prices stop falling and start rising once again. It's not even easy to spot a trend reversal. "If it was so easy to find the bottom," Markstein,(a senior economist with the NAHB), said, "we'd all be millionaires."

He goes on to say that "there are telltale signs that smart buyers can look for, evidence that the housing market has finally firmed and is about to rebound."

His key vital signs include;

Existing Home Sales
Building Permits
Mortgage Defaults
Foreclosure Sales
Mortgage Rates

You can read in detail about his five keys to look for HERE.

There are a few sources that can help your with you research. Your knowledgible realtor of course. DataQuick has some of the most up to date news and statisitics on housing markets. CAR, California Association of Realtors, is another good resource. Inman News always has good articles on Real Estate. On a national basis, you can visit NAR, the National Association of Realtors.

Labels: Bay Area Real Estate, CAR, DataQuick, Housing Market, Inman News, NAR, Real Estate Cycles

Money's tight these days, so for the first time in many tears, seller financing is making a comeback. To get deals done, people are turning their backs and doing "the old end around." - Marni Leff Kottle, San Francisco Chronicle.

"Seller financing is simple in theory: The buyer and seller settle on a price and then the seller agrees to extend some amount of credit back to the buyer. The loan is secured by the property. Typically, the seller provides financing in the form of a second mortgage after a buyer has obtained a first mortgage from a bank."

"Sellers are still able to push their price points, and buyers are getting interest rates that are lower than the retail market." Heidi Rickerd-Rizzo, Branch Manager for Pacific Union-GMAC in St Helena.

Read the entire article HERE.

Doing the deal
If you're thinking of using or offering seller financing, here are some tips from real estate experts for buyers and sellers:

Buyers
-- Agree on a price with the seller and secure a first mortgage, if applicable.

-- Your agent can serve as the arranger of credit.

-- Terms are typically outlined in a standard three-page form provided by the California Association of Realtors, so you can often complete such a transaction without a lawyer.

Sellers
-- Make sure the buyer is creditworthy.

-- In a typical transaction, you're entitled to review a buyer's credit report, financial statements and other information.

-- You may want to consult with an attorney or accountant to understand the tax implications.

Source: California Association of Realtors, Pacific Union.

Labels: Bay Area Real Estate, CAR, Interest Rate, Mortgage Lenders, Seller Finance

This is a revision from the July Post as an update for what the months supply is doing on a city by city basis for Contra Costa & Alameda Counties.

What is months supply? Basically, months supply is the ratio of inventory to sales. And what it tells us is how many months the stock of homes for sale would last, if sales continued at their current rate.

See how your City's doing.




We currently have a 8.4 month supply of homes in the entire SF Bay Area. How does this compare historically? "A state of equilibrium" is considered 6 months, a point at which you would have an equal number of sellers and buyers. Considerably less, would be considered a "seller's" market, while anything more than that number would be considered a "buyer's" market. Since 1988, our low in California has been 1.3 months in April of 2004. It was even less than that in the San Francisco Bay Area. Our high was in February of 1991 at 18.8 months. The long run average has been 6.9 months. (Statistics are from C.A.R.)

Labels: Bay Area Real Estate, CAR, Housing Inventory, Housing Statistics, Months Supply, Real Estate Cycles

This is a revision from the May Post as an update for what the months supply is doing on a city by city basis for Contra Costa & Alameda Counties.

What is months supply? Basically, months supply is the ratio of inventory to sales. And what it tells us is how many months the stock of homes for sale would last, if sales continued at their current rate.

See how your City's doing.



We currently have a 7.5 month supply of homes in the entire SF Bay Area. How does this compare historically? "A state of equilibrium" is considered 6 months, a point at which you would have an equal number of sellers and buyers. Considerably less, would be considered a "seller's" market, while anything more than that number would be considered a "buyer's" market. Since 1988, our low in California has been 1.3 months in April of 2004. It was even less than that in the San Francisco Bay Area. Our high was in February of 1991 at 18.8 months. The long run average has been 6.9 months. (Statistics are from C.A.R.)

Labels: Bay Area Real Estate, CAR, Housing Inventory, Months Supply

C.A.R. Chief Economist Leslie Appleton-Young on KNX 1070 AM, June 25, 2007.

C.A.R. Chief Economist Leslie Appleton-Young discusses the housing numbers for May 2007 and what they mean for the California real estate market. You can listen to the audio interview Here.

And here's the report that she's referring to released from C.A.R. on June 25th;

C.A.R. reports sales decrease 25 percent in May, median price of a home in California at $591,180, up 4.8 percent from year ago.

Here's a look at May's numbers for Contra Costa County;

Labels: Bay Area Real Estate, CAR, Continuing Study of the California Economy, Contra Costa Times, DataQuick, Fisher Center for Real Estate, Real Estate Cycles, San Francisco Chronicle

"As soon as a lender raises the red flag, scammers descend. Here's how they wind up holding the deed."

This is an article by Dean Foust & Brian Burnsed of BusinessWeek.

MILLIONS OF TARGETS
In most states, it's not illegal for one person to persuade another to sign his or her home over. And proving it was done through deceptive means can be tricky if the promises to help the owner were made verbally, as is often the case. So many victims have little recourse except through civil proceedings. But with the number of foreclosures estimated to soar to more than 2 million over the next couple of years, more and more policymakers are scrambling to keep the situation from turning into an epidemic by enacting tougher penalties for such practices.

View the entire article HERE.

California Foreclosure Activity Jumps Again. DataQuick

Foreclosures Hit 37-Year High. Realtor Magazine Online

“Legal Guide to Foreclosure-related Transactions" C.A.R.

The Foreclosure Report from Mike at Patagonia Finance

Labels: Bay Area Real Estate, BusinessWeek, CAR, DataQuick, Interest Rate, Real Estate Cycles, Realtor Magazine

However, these bits of information that we are able to pull are only snapshots. Tracking these numbers over time gives us the ability to spot trends. These trends may be subject to our interpretation, but they do give us an up to date insight on a market so that we are able to make a more well informed real estate decision

How many homes are for sale in your neighborhood, how long have they been on the market, and how many buyers are looking? (Simply put supply and demand). This translates to actives, average days on the market (actives only), and pending sales. The relationship that we find to each other in our respective markets can give us some indication as to whether we are in a sellers, a normal, or even a buyers market. This can be done on a more local basis, being able to look at your neighborhood by itself.



The chart above tracks the number of actives (homes for sale) and the number of pendings, (homes that are in contract with buyers). The sample was taken from 34 cities within Alameda and Contra Costa Counties. Pendings have dropped in comparison to actives since July of 2005. While the inventory (homes for sale) have climbed at a very aggressive pace since then. Simply put, there are more homes on the market with fewer buyers.

We currently have a 6.5 month supply of homes in the area. How does this compare historically? "A state of equilibrium" is considered 6 months, a point at which you would have an equal number of sellers and buyers. Considerably less, would be considered a "seller's" market, while anything more than that number would be considered a "buyer's" market. Since 1988, our low in California has been 1.3 months in April of 2004. It was even less than that in the San Francisco Bay Area. Our high was in February of 1991 at 18.8 months. The long run average has been 6.9 months. (Statistics are from C.A.R.)

See how your City's doing.


We, as real estate agents, have access to the MLS, and are able to extract up to the minute information to give us a better clue as to what’s really happening in your neighborhoods.

Some of what you see is seasonal, some unique to this market.

The graph above measures a very large area. A sample this large, translates to being able to make only very broad general conclusions about this market overall. It doesn’t necessarily tell the story of the market in your particular neighborhood.

In reality, there are markets within markets, different neighborhoods within cities. Not every neighborhood in Berkeley, for example, will be quite the same. Some neighborhoods will have stronger markets than others. The right house, presented well, in the right neighborhood, and at the right price continues to bring multiple offers. However, in most cases, homes are staying on the market longer, we’re seeing price reductions, and there are more homes coming onto an already saturated market.

What can you make of all this? Making your real estate decisions should be based on up to date information that reflects the conditions of your specific neighborhood. Ask your well informed real estate agent to talk to you about the market trends and conditions of your neighborhood before making that all important decision to buy or sell a home.

Labels: Bay Area Real Estate, CAR, Housing Inventory, Months Supply

Prices also up in Alameda County, down Solano County; sales increase in March but down from 2006 - By Barbara E. Hernandez, CONTRA COSTA TIMES.

The median price paid for a Bay Area home in March was $639,000, up 3.1 percent in a month's time, bucking the national trend and regaining much of the decline since last summer, but the chorus still isn't singing "Happy Days Are Here Again." - George Raine, Chronicle Staff Writer.

"The housing market in the state will show a substantial decline this year, on the order of 2 or 3 percent,'' said Ken Rosen, director of the Fisher Center for Real Estate at UC Berkeley. Moreover, he said he expects the state's housing market to stay soft for a while.

"We had such a large run-up (in home prices) in the state as a whole in the last four years and now there is excess inventory in unsold houses -- in San Diego, Sacramento, Orange County and the Central Valley in particular,'' Rosen said. "Usually, the reaction time to an overheated market is two to three years.''

On the day after the normally glass-is-half-full Realtors trade association said the median price of existing U.S. homes will fall nearly a percentage point this year, DataQuick said that Bay Area prices are holding their only-in-the-Bay Area value.

"Prices seem to have held up surprisingly well, probably because of a relatively strong economy. Additionally, it's starting to look like much of the current sales lull may be due to the strong sales in 2004 and 2005. Some of today's demand probably got pulled into that period because of low mortgage interest rates and the availability of exotic mortgages," said Marshall Prentice, DataQuick president.

Levy, at the Center for the Continuing Study of the California Economy, said that the housing downturn of the 1990s, with slow and flat activity in prices and sales volumes, lasted seven years and that there is no reason to believe the current downturn will be short term. "I think we are closer to the middle of the housing adjustment process than to the end,'' he said.

"What the National Association of Realtors said about the price of homes going down screams volumes,'' Thornberg added. "It says, 'Guess what. This is not over. We have a ways to go.' To think we are out of the woods is silly.''

"The big story,'' said Michael Lehmann, professor emeritus of economics at the University of San Francisco, "was the big surge in prices of homes between 2000 to 2005. That is over here and everywhere,'' he said. "And overall, if the weakness continues across the nation, it will be hard for the Bay Area to resist it in the long run."

Labels: Bay Area Real Estate, CAR, Continuing Study of the California Economy, Contra Costa Times, DataQuick, Real Estate Cycles, San Francisco Chronicle

National decline would be first in record-keeping era - By David Armstrong, San Francisco Chronicle Staff Writer.

"Saying that the housing bubble has truly burst, the National Association of Realtors predicted Wednesday that the median price of existing U.S. homes is expected to fall 0.7 percent this year, the first time that has happened since records started in the late 1960s."

"The forecast was startling, coming from the normally upbeat industry group. Last year, in a sign of the start of the slowdown, the nationwide median price of an existing home rose a modest 1 percent."

"The California Association of Realtors predicted in October that statewide median prices would fall by 2 percent in 2007."

"Economy.com analyst Mark Zandi called for an even sharper statewide drop of 6 percent."

California's struggling housing market is weakening as lenders tighten underwriting standards. "Mounting foreclosures will also be a weight on housing prices as these properties are dumped into the already fragile market at a significant discount," Zandi said in an e-mail. "This outlook assumes that interest rates remain stable and that the job market outside of housing remains stable.''

"The National Association of Realtors has also lowered its 2007 forecast for sales of new and existing homes. Tighter lending standards and the continued fallout from the subprime mortgage meltdown are to blame, said association spokesman Walter Molony."

"The national median new home sale price is expected to rise 0.4 percent this year, after a 1.8 percent gain in 2006, the association said."

"However, these figures, even revised downward, are still overly optimistic, said Ken Rosen, director of the Fisher Center for Real Estate at UC Berkeley."

Rosen expects a drop of 2 to 3 percent nationally, and as much as 5 to 15 percent in some markets. "The Bay Area will do better because it is one of the top five markets in the country. It has a small inventory and good job creation,'' he said.

"In Rosen's view, home prices could appreciate from 1 to 3 percent in the Bay Area this year."

"Despite the unsettled quality of the current housing market, this, too, shall pass, housing industry experts said."

"We still view this as a cycle playing itself out,'' DataQuick's LePage said.

Labels: Bay Area Real Estate, CAR, DataQuick, Fisher Center for Real Estate, Real Estate Cycles, San Francisco Chronicle